costs Flashcards
what does an enterprise do before it starts trading?
spends money on setting up - start-up costs
what are the running costs?
once an enterprise is trading, It will have day-to-day costs
start-up costs:
what will a clothing manufacture require to produce goods
industrial premises, machinery and materials
start-up costs:
what will a high street retailer require?
shop premises, shop fittings and items to sell
start-up costs:
what will a service enterprise require?
a garage premises, parts and tools
who pays start-up costs? (4)
owners own money
money loaned or given by family and friends
business loan
an investor
what must an enterprise do before it earns any income?
has to ind the finance to pay its start-up costs
what are the 2 main types of running costs?
fixed costs
variable costs
what are fixed costs?
that the enterprise has to pay no matter how well it is doing
what are the 4 common fixed costs?
rent
business rates
insurance
heating and lighting charges
what are the variable costs?
costs are directly related to the number of items produced or sold
variable costs:
what does it mean if a clothing manufacturer has more orders for t-shirts?
they need more material to produce the t-shirts
how do you calculate the total running costs?
total costs = fixed costs + variable costs
how can running costs increase?
as an enterprise grows in size
what must the running costs be paid for out of?
the increased income generated by the enterprise
